Define a strategy of loyalty program for Google Pay.
Is this for B2C users and not for merchants? For this answer, assuming that it is
Assumption – Is the goal is to increase number of transactions and average transaction values?
Customer segments to focus on
Users who transfer funds to other users and make payments to businesses using Google Pay can be segmented based on the volume and value of payments to businesses into High, Medium, and Low.
The target segment for this feature would be users with high volumes of payments to merchants.
I would like to first look at how Google Pay currently incentivizes its users. It provides coupons after a certain number of transactions that either give cash to the user or can be used for a vendor.
In some ways, there is already a loyalty program in that as your transactions increase, you get a reward.
The difference between the current system and a proper loyalty program is that in a loyalty program, the terms would be clear upfront. The loyalty program has to offer greater benefits as the volume and value of transactions increase. The rewards need to be guaranteed and not a lucky draw model like the coupons Google Pay currently provides.
Ideally since this is a loyalty program, at the start when a user opts into the loyalty program, there should some sort of fee or buy-in which will encourage stickiness as there are many competitors to Google Pay. This fee could then be refunded through points on meeting certain targets.
Each transaction would generate a certain percentage of the transaction value as points. The points could be used to purchase coupons similar to the ones Google Pay provides today on the platform.
The transactions that would generate points would be payments to merchants registered on Google Pay and not payments to individuals. I am not aware of whether Google Pay collects a percentage of every payment at a registered merchant, but it is important to incentivise payments and not fund transfers.
Google Pay could have tie ups with prominent platforms like Amazon for which coupons could be purchased on Google Pay using the points collected.
This can drive transactions at merchants much better than the current incentive system.
This will put it in direct competition with credit cards.
Credit cards make money on every transaction done at a merchant. If Google Pay does not make a similar cut, it could lead to a significant cash burn.
Assuming that the objective is to drive the usage of Google Pay for purchases at merchants, I would go with the above approach of having an initial buy-in fee and then providing a certain number of points based on the transaction value. This can drive significant increase in usage as the user is clear on the benefits over time and each transaction contributes to his/her rewards.
Measuring the impact
The metrics that would have to be tracked are:
Percentage of users buying into the program
Number of merchant payments per loyalty program customer
Revenue from merchant payments (Depending on whether Google Pay does collect a percentage of the sales)
Revenue per loyalty program customer